The Philippines Pursuing Tax Reform

by Mary Swire, Tax-News.com, Hong Kong

23 January 2017

Philippines is undertaking sweeping reforms at the Bureau of Internal Revenue (BIR) and the Bureau of Customs to improve taxpayer satisfaction and restore public trust, according to Finance Secretary Carlos Dominguez III.

Dominguez said that the BIR has started expanding its Large Taxpayers Service to cover the top 3,000 corporations, which account for 75 percent of total tax revenues. It is also seeking to simplify forms and procedures for small taxpayers to encourage tax compliance and ease payments, along with improving its electronic payment systems and enforcing risk-based audits "to make the tax process more transparent and easier for taxpayers to comply with."

"At the same time, we are intensifying the anti-corruption and tax evasion effort, recruiting 12,000 young people of integrity and competence to fill the BIR's large vacancy," he said.

The BOC, is now completing the implementing rules and regulations of the Customs Modernization and Tariff Act, Dominguez said, to further step up both its anti-corruption and anti-smuggling operations, while improving the facilitation of trade. Electronic systems at the BOC are also being upgraded to pave the way for paperless transactions that will, in turn, reduce opportunities for corruption, Dominguez said.

"Administrative reforms will be supplemented with more intensive border patrols and other measures to curb technical smuggling, including the use of fuel marking," he said.

As in the BIR, Dominguez said the customs bureau is also eyeing the recruitment "of about 3,000 young and talented people willing to work in a corruption-free BOC."

The Government is likely to pass a comprehensive tax reform package this month that the Department of Finance submitted in September last year for congressional approval. The package includes cuts to personal income taxes primarily for the benefit of wage earners and other low-income Filipinos, along with measures to offset the projected revenue losses from the lower tax rates, such as by adjusting the fuel excise tax and automobile tax, and broadening the value-added tax base by removing certain exemptions.

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